Chief of Boeing-backed electric air taxi venture predicts sector ‘shakeout’

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114 shares, 175 points

The number of companies in the electric air taxi industry will shrink next year as investors tighten their belts amid global economic uncertainty and focus on projects they believe will come to fruition, the chief executive of a Boeing-backed venture has said.

“I expect more shakeout next year,” Gary Gysin, chief executive of Wisk Aero, told the Financial Times in an interview. “I would expect two or three more that don’t make it through 2023.” 

He said that funding for “a lot of these companies was running out . . . the question is: will they be able to get another raise and continue on or not?” 

“People will double down on those projects they think will really make it,” he added, saying financial backers had become “a lot smarter and wiser as to what it takes to be successful in this market” following a rush of enthusiasm last year, during which a handful of businesses listed through special purpose acquisition companies (Spacs).

Gysin said he believed that, ultimately, only four or five companies would be left standing and cited competitors Beta Technologies and Joby Aviation as rivals that he “respected”. 

He insisted that Wisk’s funding would continue even though one of the company’s major investors, air taxi start-up Kittyhawk, announced last week it would be shutting down. The company’s goal was to build an air taxi that was smaller and lighter than others in the industry.

The sector has attracted billions of dollars in recent years as investors have bought into the dream of fast and affordable transport in the skies, although aviation regulators have yet to certify the vehicles to fly.

“I don’t think there has been enough attention paid to the business plans of the people that will actually operate these aircraft,” said Kevin Michaels, managing director of AeroDynamic Advisory. “Most of the attention is on the vehicles themselves and the technologies. But how can people actually make money operating these . . . can you have an Uber in the sky?”

Wisk was formed as a joint venture between Boeing and Kittyhawk, with the latter backed by Google co-founder Larry Page. Boeing is the majority shareholder in Wisk, having earlier this year pumped an additional $450mn into the venture.

The Kittyhawk market exit had “no impact on us whatsoever” because Page “is still in the game” with multiple investments in the space, said Gysin. Wisk does not have to find another partner but was “open and in conversations” with other companies, he added.

The group differs from most rivals in that it focuses on autonomous flight. It is due to reveal its latest-generation vehicle, a four-seater, early next month.

Boeing said in a statement that Kittyhawk’s “decision to cease operations did not change Boeing’s commitment to Wisk”, adding that it did not expect the move “to affect Wisk’s operations or other activities in any way”.

Kittyhawk did not respond when approached for comment. “We have made the decision to wind down Kittyhawk. We’re still working on the details of what’s next,” its social media posts said.

Investors last year poured close to $7bn into the market for all types of future air mobility solutions, mainly through Spacs listed on US stock markets, according to data from McKinsey. While all kinds of vehicles, from cargo planes to surveillance drones, are planned, almost 75 per cent of the money went to companies developing manned electric vertical take-off and landing (eVTOL) craft.

Much of that exuberance, however, has since evaporated. The industry has attracted $2.5bn of funding this year, according to McKinsey.

Robin Riedel, a partner at McKinsey who leads the consultancy’s future of air mobility group, said there was still a broad range of industry players attracting funding. “Fundamentally, we are still funding start-ups here,” he said.

Source: Financial Times

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